The Importance of Planning Planning is essential to the success of any undertaking. Critical factors that must be addressed when planning are: Realistic goals. These must be specific, measurable, and set within time parameters. Commitment. The venture must be supported by all involved—family, partners, employees, team members. Milestones. Subgoals must be set for continual and timely evaluation of progress. Flexibility. Obstacles must be anticipated, and alternative strategies must be formulated. © 2007 Thomson/South-Western. All rights reserved.

What is a Business Plan? A written document that details the proposed venture: Describes the current status, expected needs, and projected results of the new business. Covers the project, marketing, research and development, manufacturing, management, critical risks, financing, and milestones or a timetable. Demonstrates a clear picture of what that venture is, where it is projected to go, and how the entrepreneur proposes it will get there—a roadmap for a successful enterprise. © 2007 Thomson/South-Western. All rights reserved.

Benefits of a Business Plan For the entrepreneur: The time, effort, research, and discipline required to create a formal business plan forces the entrepreneur to view operating strategies and expected results critically and objectively. Competitive, economic, and financial analyses in the plan quantify objectives and provide measurable benchmarks for comparing forecasts with actual results; allowing close scrutiny of its assumptions about the venture’s success. For outside evaluators: The business plan provides a tool for use in communications with outside financial sources. © 2007 Thomson/South-Western. All rights reserved.

Benefits of the Business Plan (cont’d) Specifically for the financial sources: Details the market potential and plans for securing a share of that market. Shows how the venture’s intends to service debt or provide an adequate return on equity. Identifies critical risks and crucial events with a discussion of contingency plans. Contains the necessary information for a thorough business and financial evaluation. © 2007 Thomson/South-Western. All rights reserved.

Elements of a Business Plan Section I: Executive Summary Section II: Business Description A. General description of business B. Industry background C. Goals and potential of the business and milestones (if any) D. Uniqueness of product or service Section III: Marketing A. Research and analysis 1. Target market (customers) identified 2. Market size and trends 3. Competition 4. Estimated market share Source: Donald F. Kuratko, Ray V. Monatgno, and Frank J. Sabatine, The Entrepreneurial Decision (Muncie, IN: The Midwest Entrepreneurial Education Center, College of Business, Ball State University, 2002). © 2007 Thomson/South-Western. All rights reserved.

Elements of a Business Plan (cont’d) Section III: Marketing (cont’d) B. Marketing plan 1. Market strategy – sales and distribution 2. Pricing 3. Advertising and promotions Section IV: Operations A. Identify location 1. Advantages 2. Zoning 3. Taxes B. Proximity to supplies C. Access to transportation Source: Donald F. Kuratko, Ray V. Monatgno, and Frank J. Sabatine, The Entrepreneurial Decision (Muncie, IN: The Midwest Entrepreneurial Education Center, College of Business, Ball State University, 2002). © 2007 Thomson/South-Western. All rights reserved.

Elements of a Business Plan (cont’d) Section V: Management A. Management team—key personnel B. Legal structure—stock and employment agreements, and ownership C. Board of directors, advisors, and consultants Section VI: Financial A. Financial forecast 1. Profit and loss 2. Cash flow 3. Break-even analysis 4. Cost controls 5. Budgeting plans Source: Donald F. Kuratko, Ray V. Monatgno, and Frank J. Sabatine, The Entrepreneurial Decision (Muncie, IN: The Midwest Entrepreneurial Education Center, College of Business, Ball State University, 2002). © 2007 Thomson/South-Western. All rights reserved.

Elements of a Business Plan (cont’d) Section VII: Critical Risks A. Potential problems B. Obstacles and risks C. Alternative courses of action Section VIII: Harvest Strategy A. Transfer of asset B. Continuity of business strategy C. Identity of successor Section IX: Milestone Schedule A. Timing and objectives B. Deadlines and milestones C. Relationship of events Section X: Appendix or Bibliography Source: Donald F. Kuratko, Ray V. Monatgno, and Frank J. Sabatine, The Entrepreneurial Decision (Muncie, IN: The Midwest Entrepreneurial Education Center, College of Business, Ball State University, 2002). © 2007 Thomson/South-Western. All rights reserved.